I was approached by an old client of mine. He was the Chief Investment Officer of an investment firm and needed to re-mortgage his house in Fulham in order to pay for some extensive renovations.
His house was worth £3.5 million and the mortgage upon it was currently £525,000. My client needed up to extend the mortgage to £1.3 million.
Due to the nature of his pay structure my client’s basic salary was quite low and his bonus was predominantly paid in shares as vested stock for which reason he needed a bonus income mortgage.
As these shares would not vest for a number of years my client was unable to secure a mortgage with traditional high street banks because they are unable to recognise these as income.
He was prepared to give £500,000 worth of shares to the bank as assets under management.
I was able to find a bank that was happy to recognise the value of these shares for mortgage purposes. This not only gave the private bank the security they needed but enabled them to offer him a preferential interest rate of 1.75% over the base rate – giving him a pay rate of 2.25% on an interest-only basis, which was another requirement the client had.
This interest only rate exceeded his expectations and my client was very happy.